Obama White House awards HBCUs, but how will the money be managed?

President Barack Obama (C) signs an executive order in the East Room of the White House February 26, 2010 in Washington, DC. Obama delivered remarks and signed an executive order for the White House Initiative on Historically Black Colleges and Universities during the event. (Photo by Win McNamee/Getty Images)

The Department of Education recently announced it is providing $228 million in grants to 97 historically black colleges and universities (HBCUs) in 19 states. The funds will be used for campus expansion, counseling programs, science equipment and faculty training.

“HBCUs have made enduring, even staggering contributions to American life despite the steep financial challenges many have faced,” said U.S. Secretary of Education Arne Duncan. “The grants will help these important institutions continue to provide their students with the quality education they need to compete in the global economy.”

The announcement is welcome news for financially challenged institutions who, like the black community as a whole, have been hurting during the U.S. economic downturn. In addition, the grants will ease the concerns of critics who believe President Obama has not done enough to help the black community, his most ardent supporters.

Nevertheless, with the collapse of Morris Brown College— due to financial mismanagement, corruption, financial aid theft and foreclosure—and the overall precarious fiscal state of HBCUs, some are wondering if these schools can be trusted to properly manage their finances.

Among the historically black institutions facing economic woes are Bethune-Cookman University and Florida Memorial University. Money troubles have translated into accreditation issues and warnings for Fisk University, Tennessee State, Bennett College, Tugaloo College, Saint Paul’s College, Southern University, Virginia Union University, Grambling State University and others. Loss of accreditation affects a university’s reputation, fundraising and access to financial aid— which is crucial to the well-being of HBCUs.

In addition to Morris Brown, Alabama A&M University and Florida A&M have faced financial accountability problems, including financial aid theft.

Formed after the Civil War in order to provide the formerly enslaved with access to education, HBCUs serve an often marginalized, disadvantaged population. Typically, they accomplish this with less funding than their resource-rich white counterparts, with whom they must compete for funding.

Although the 105 HBCUs account for 3 percent of all U.S. colleges, they enroll 12 percent of black college students, produce 23 percent of all black college graduates, 40 percent of the nation’s black science graduates, and 60 percent of blacks holding engineering degrees. Further, these institutions are responsible for generating 50 percent of all African-American professionals and public school teachers, 75 percent of African-American Ph.Ds, 80 percent of black federal judges, and 85 percent of all African-American doctors.

Leadership in the HBCUs is at a crossroads, with vacancies for the position of president open at 16 colleges. According to John S. Wilson, executive director of the White House Initiative on Historically Black Colleges and Universities, the abnormally high vacancies are part of a problem that has been simmering for years, with an uphill battle in attracting quality leaders, but the immediate issue is the state of the economy.

“The reasons probably vary according to the institutional diversity in the HBCU sector, but it is not unreasonable to think that many of the vacancies are tied to the general stress of the economy and the constraints it places on people’s ability to both contribute to and pay for higher education. Simply put, a tighter economy intensifies the quest to remain competitive,” he said.

With smaller endowments and 50 percent lower tuition ($10,000 less than predominantly white colleges) due to the disproportionately low income populations they serve—not to mention higher dropout risks due to economic and academic reasons—HBCUs are feeling the pinch. Reliant on government funding, these schools have been negatively impacted by recessionary budget cuts. In 2011, the United Negro College Fund experienced a cut of more than $25 million in funding for strengthening historically black colleges and universities.

According to a survey by the National Association of College and University Business Officers, Howard University — the best-endowed black college — ranks 132nd in the nation with a $371 million endowment.

Ohio State has an endowment of over $2 billion dollars, which is far more than twice the combined endowment of the schools of the historically black Southwestern Athletic Conference (SWAC) and Mid-Eastern Athletic Conference (MEAC).

Further, while Harvard University’s endowment is $19 billion, the combined endowment of all HBCUs is only $1.6 billion.

Some HBCUs place their already limited endowments at risk when they fail to attack the problem of hazing-related deaths on campus. Lawsuits related to hazing incidents can exact a high financial cost by eating into small college endowments. In addition, hazing drives away long-term donors, ruins the school’s reputation and costs HBCUs revenue when students decide to attend another school for fear of hazing.

“Historically black colleges and universities (HBCUs) have suffered disproportionately in the current financial crisis. The difficult situations at these institutions have many causes, but they stem in large part from the commitment of HBCUs to serving disadvantaged students and from the history of underfunding and discrimination that disadvantages HBCUs themselves,” said Marybeth Gasman, associate professor of higher education in the Graduate School of Education at the University of Pennsylvania.

According to Gasman, tight budgets and low matriculation levels have caused HBCUs to take drastic steps to stay alive. Leaders in these schools must make smart decisions, she added, and allocate more resources to faculty salaries and tenure, and student scholarships to remain competitive. Gasman also urged black schools to avoid mission creep by focusing on providing a solid education and empowering a new generation of leaders. Institutions, she said, must also commit resources to train faculty and staff in grant writing, including federal grants, and encourage partnerships with majority institutions. Meanwhile, federal and state government and private donors can assist with infrastructure support to these colleges, which would attract more alumni support and build endowments.

Wilson said that HBCUs are viewed as “symbols of the past” rather than “forces for the future.” These institutions, in his view, need solid leaders and not just managers — leaders who speak out on issues and possess a vision, are fundraising savvy, and are able to shape and grow the institution and work with a variety of stakeholders. He also suggests that HBCUs have difficulty attracting students and funding because they are invisible. They have failed to articulate their “institutional value,” who they are and what they bring to the table, including a commitment to black excellence, a dedicated faculty and a culturally and emotionally supportive environment. This comes at a time when, unlike 40 years ago, many black students may no longer view HBCUs as their best option.

If HBCUs are fiscally faltering, then their students are as well. For example, of the 116 colleges and universities with a student loan default rate of 10 percent or more, 42 percent are HBCUs. Jarrett L. Carter of HBCUDigest.com has suggested that in order to stay afloat and increase fundraising and alumni giving during lean times, HBCUs should train all of their students in business entrepreneurship. “But if HBCUs condition students to think as owners and not workers, the effort will yield the alumni who own property and business brands that will fund their respective alma maters, and develop the next generation of entrepreneurs that will create a golden age of self-sufficiency and unlimited growth for Black America,” Carter said.

Some HBCUs are defining themselves as “small, private liberal arts” or “multicultural, comprehensive” colleges — in addition to their mission serving the black community — as a means of niche marketing. Others are combating dwindling enrollment and funding shortfalls by recruiting non-African-American students.

“We know HBCUs have value and this is the ideal time to demonstrate that value. The opportunity to choose new leadership can be good and hopeful,” Wilson noted. “The current challenges facing many HBCUs can often be traced to decades of decisions made or not made by HBCU boards. The question is: Do today’s trustees have what it takes to imagine, sift, and select leadership for a necessarily new future?”